RBA Minutes: Rise in AUD would slow inflation and growth

The Reserve Bank of Australia (RBA) is out with its June monetary policy minutes, with the key headlines found below.

Low rates supporting economy, steady policy consistent with goals.

Progress on unemployment and inflation expected to be only gradual.

Recent data consistent with forecast acceleration in gdp growth to above 3 pct.

Inflation to remain low for some time, pick up gradually to above 2 pct.

A rise in the A$ would lead to slower pickup in inflation, economic growth.

Labour market had eased in recent months, but leading indicators pointed to pick up.

Wage growth low and stable, liaison showed more firms expecting faster growth.

Fair work commission 3.5 pct pay award likely to boost overall wage growth in Q3.

Data suggested household consumption was less buoyant in q2, partly due to warm weather.

Public infrastructure investment expected to support economy for some time yet.

Board noted house prices had eased further in Sydney and Melbourne, still up 40 pct since early 2014.

Board discussed demographic trends, strong population growth and need for infrastructure spending.

Prospect of further tariff measures on trade a downside risk to global outlook.

Board discussed political risks in Italy and EU, instability in emerging markets.

Key Notes:

AUD/USD Technical Analysis: new US tariff threats kick the Aussie into a one-year low

US policy a "source of menace" for the AUD - ING

About RBA Minutes:

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.